FactCheck: Does Labour get 80 per cent of its money from those it honours?
Updated on 14 July 2006
Not even close...
The Claim
"With nearly 80 pence in the every pound given to the Labour Party coming from benefactors who have been honoured, it is no wonder their backbenchers and now elected officials are panicking."
Alex Salmond, leader of Scottish National Party
Background
With expensive campaigns to fight, Labour, like all the major parties has been forced to turn to private donors for money. This has led to a long list of scandals, with allegations that the donors are receiving some kind of quid pro quo, such as government contracts, in return for their money.
In particular, the row has focused on the issue of loans for peerages which culminated in the arrest of party fundraiser Lord Levy on Wednesday.
In the past, the Labour party has received much of its funding from the trade unions. But New Labour has built up its links with business owners, and now relies substantially on donations from wealthy individuals, such as Lord Sainsbury and Sir Christopher Ondaatje.
But the question is, how much? Given the media attention devoted to these figures, you could easily conclude that they provide the majority of the party's backing. And that's certainly what Mr Salmond seems to be saying.
This is a claim the SNP have made several times, including on BBC Radio 5 on 12 July.
But does the Labour Party really receive 80 per cent of its income from private individuals who ubsequently find themselves in receipt of gongs and ermine?
Analysis
According to SNP staff, this claim is based on a Sunday Times article from June 5, 2005, entitled 'Blair axes watchdog set up to stop honours for donors'.
The article says that "In total 80 per cent of the money raised from individuals by Labour is from people who have been honoured."
The figure is more than a year old, so it could be argued that it is out of date. But Mr Salmond makes a more serious error. He refers only to individual donors, not overall donations.
According to the Electoral Commission website, Labour received donations worth £21.7m in 2005. Of this, more than half, or £12m, came from trade unions. Individuals, ennobled or otherwise, accounted for less than half the party's income from donations - £7.6m, or 35 pence in the pound, not 80!
It's also worth noting that Labour, like most parties, also receives money from other sources, such as individual subscriptions, commercial income, union affiliation fees, fundraising dinners and so on. These
accounted for nearly £20m, according to the party's latest set of accounts, for 2004.
But do honour recipients even account for 80 per cent of individual donations?
Answer - more or less. The Electoral Commission lists over 800 donations going back to 2001. An analysis of the largest donations made by individuals, of £50,000 or more, (who account for £19m of the £23.3m donated since 2001), shows that 77 per cent of the money comes from people who either hold an honour at the time of donation, or subsequently receive one.
Sixty six per cent of the money came from donors who are now Lords or Knights, with 11 per cent coming from OBEs and CBEs. If you were to add in the
sums from smaller donors, most of whom do not have honours, these figures would drop slightly.
In the same statement, Mr Salmond also clains that "Official records show that everyone who has donated more than £1m to the Labour Party has received a knighthood or peerage."
This is not true - the steel magnate Lakshmi Mittal has made several donations to the party, including £2m in July 2005. He has received neither a knighthood nor a peerage.
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Verdict
Alex Salmond's form of words ignores a crucial point - the money Labour receives from private donors is less than half its total donations, and an even smaller proportion of its total income.
That it is is essentially correct to say that the vase majority of the money Labour receives from individual donors comes from people who have received Peerages or Knighthoods, doesn't alter the fact that Salmond's words are likely to mislead.
The Sources
Labour Engulfed in Donations Scandals by Alex Salmond, 16 March 2006
'Blair axes watchdog set up to stop honours for donors', The Sunday Times, 5 June 2005
Electoral Commission
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